An inquiry has begun into alleged sex abuse by the politician Cyril Smith in the 1960s

A former director of public prosecutions lied over his knowledge of child sex abuse claims against MP Cyril Smith, an inquiry has heard.

The 29-stone politician was the subject of sex abuse accusations and investigations over decades during his career in Rochdale, but was never prosecuted and received a knighthood before his death in 2010.

The national inquiry has begun hearing evidence examining how Smith was able to carry out his alleged offences at Cambridge House hostel and the Knowl View residential school in Rochdale in the 1960s.

A police investigation into the Liberal MP's alleged sexual abuse of young boys ended in 1970 when the Director of Public Prosecutions (DPP) Sir Norman Skelhorn concluded it was unlikely to lead to a successful prosecution.

Lead counsel Brian Altman QC said that the security services were informed that the Rochdale Alternative Press (RAP), which published an investigation into Smith in 1979, had been misled by Sir Norman's office.

The hearing was told MI5 passed allegations about Smith's abuse over to authorities

He said of material provided to the inquiry by MI5: 'The documents show that the Security Service's legal adviser was informed of the false representations to the press from the DPP's office.'

According to the records, the DPP told the publication it had never received police reports of abuse by Smith, who died in 2010.

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No national newspapers reported on Smith's alleged behaviour despite the 1970 police investigation, which focused on allegations from Cambridge House, and the 1979 RAP report, Mr Altman said.

'This is despite the fact that Cyril Smith did not take any form of action against RAP,' he added.

But former top prosecutor Sir Norman Skelhorn decided the claims were unlikely to lead to a successful prosecution

An investigation into the MP in 1970, the year he first ran for national office, concluded he was hiding behind a 'veneer of respectability' to target eight young boys at Cambridge House during the 1960s.

Lancashire Police's detective superintendent Leach was said by Mr Altman to be 'unsparing' in his assessment of Smith in a report to the force's chief constable.

The report said: 'It seems impossible to excuse his conduct over a considerable period of time whilst sheltering behind a veneer of respectability.

'He has used his unique position to indulge in a sordid series of indecent episode with young boys towards whom he had a special responsibility.'

The officer said the allegations, which included that he spanked some boys on the bare bottoms and medically examined others, 'stood up', the hearing was told.

In 1988, when Smith was made a knight, then prime minister Margaret Thatcher had probably been informed of his chequered past, the inquiry heard.

Mr Altman told the inquiry: 'I mention this knighthood here for two reasons. First, because it demonstrates that the Lancashire investigation and the RAP article had been considered at the very highest level of politics and seemingly did not prompt more than consideration of the DPP's decision not to prosecute.

'Second, because it is important to bear in mind the extent to which Cyril Smith continued to involve himself in serious issues related to the welfare of children.

'A knighthood would only have reinforced Smith's veneer of respectability and power.'